- Identify how to develop a marketing mix: product, price, promotion and place.
- Identify elements of product to include: design, package, brand and product life cycle.
- Identify elements of price to include: pricing methods (factors such as completion, discounts) and break-even chart.
- Identify elements of promotion to include: Advertising – functions and types of media, Sales Promotion – definition and types, Public Relations – definition and types, Personal Selling.
- Identify elements in place to include: channels of distribution, definitions of retailer, wholesaler and franchising.
Marketing Mix consists of four elements that a business can use to persuade customers to buy their goods or services. The management of the mixing of the four elements is the key to successful marketing. The four elements must be co-ordinated to produce a marketing plan that will increase sales, for example, an expensive cosmetic product would have to be wrapped in quality packaging and only sold in high-class shopping outlets.
1 Product/Service: The item being sold plus anything related to it, how it is made, packaged and named. The business needs to consider product/service options, the after-sales service, warranties and servicing.
Product design: The product/service must do what it is expected to do. The product must be aesthetically appealing in terms of shape, size, colour, style, and image e. g. iPhone. The product must be practical and comply with safety standards, must also take account of consumer legislation such as the Sale of Goods and Supply of Services Act 1980. The service (product) that banks offer such as overdrafts or mortgages must comply with all consumer legislation.
Packaging: The package is the front line of marketing. Through design and marketing communications, packages can help sell a product and differentiate it from similar products. The packaging can also help promote product branding, make items tamper resistant, reduce theft and provide product security. Packaging regulates unit size and helps stock/inventory control.
Branding: Having a brand name makes it easier to distinguish the product/service from competitor’s product/service. Branding helps buyers to identify a particular supplier’s goods/services and creates and maintains their confidence in the performance of the brand, encouraging brand loyalty.
Product Life Cycle: This is a theory that describes distinct life stages in sales of a product. Product lives vary from very long to very short depending on the nature of the product itself. Some products like fashion shoes have a very short life cycle as they are replaced quickly with new fashions.
2 Price: the amount of money charged for the product or service.
Pricing Methods: Firms can opt for a different pricing strategy depending on market conditions and stage of life cycle such as cost plus pricing, premium pricing, penetration pricing, competitive pricing and discriminatory pricing.
Break-Even Chart: Shows the amount of profit/loss the business will make at different output levels. The break-even point (BEP) is where revenue and costs are equal – the firm neither makes a profit nor a loss.
3 Promotion: Promotion encompasses all activities which bring the product/service to the attention of the customers and persuade them to buy that product/service.
Advertising: Advertising is the communication of information to a target market using the media such as press, publications, posters, radio, TV, cinema and internet. There are different types of advertising including informative, persuasive, generic, and reminder.
Advertising includes the publication of facts or opinions concerning goods/services to awaken the public’s interest and persuade them to purchase. It is a very public form of communication and suitable for a wide audience. In order to be effective, advertising should create attention, interest, desire and action.
Sales Promotion: This involves the use of temporary incentives, gimmicks/activities to encourage customers to purchase. Forms of sales promotion include coupons, vouchers, loyalty cards, free samples and competitions. These may be useful when launching a new product/service or re-launching an existing product/service. The purposes of sales promotion include: attracting new users for the product; rewarding loyal users and increasing purchasing frequency among occasional users.
Sales promotion can be used to complement direct advertising and encourage repeat business. It can be aimed at the customer or the retailer.
Public Relations (PR): The aim of PR is to generate positive customer relations for the business. It achieves favourable publicity thereby creating a positive image for the product, service or firm. Methods for communicating the message include: press statements to the media; photo opportunities; newsletters; annual reports; company brochures; charitable activities; open days and sponsorship.
Sponsorship is where a company pays money so that their name/logo can be associated with an event/sports team. The company will then be tied to any publicity of the event/sports team.
Personal Selling: This occurs when a salesperson is in direct contact with the customer and tries to persuade customers to buy a product or service. Sales representatives must have good personal and communications skills. They must have detailed knowledge of the product or service being sold. They provide feedback to the company on customers’ reactions to the product/service.
4 Place: This element is about distributing the right product/service to the customer at the right place and at the right time.
Channel of distribution: This is the process of moving the products around the market from the point of manufacture to the point of sale.
Wholesaler: The wholesaler is the link in the channel of distribution that connects the manufacturer to the retailer. The wholesaler provides a number of services to the manufacturer including: purchasing the product in large quantities; storing the product; gathering information on consumer preferences/trends and breaking down the bulk quantities (i.e. sells in smaller quantities). The wholesaler also provides a number of services to the retailer including delivery service and credit facilities. Example: Musgrave Wholesalers.
Retailer: The retailer is the link in the channel of distribution connecting the consumer to the wholesaler or the manufacturer. They sell a range of goods directly to consumers, e. g. newsagent, bookstore, health food shop.
Franchising: This is a very popular type of retailing. It is an agreement under which the original owner/business (franchiser) sells the rights to another business (franchisee) allowing it to sell its products or services or use the company name or idea in return for a fee and royalties, e.g. McDonald’s, Gloria Jeans, Snap-on and Subway.
National Bank Ltd. provides Irish customers with savings and investments, credit facilities, payment services and pensions. In January 2016 it launched its new home insurance facility ‘PROTECTION’, providing different policies, buildings and contents insurance options. It charges a reduced premium 30% off standard house insurance rates. Quotations (prices) can be obtained directly online. The facility “PROTECTION” had a high profile celebrity launch accompanied by an extensive advertising campaign. The Insurance market in Ireland is highly competitive however National Bank Ltd. plans to target a market share of 20% within two years.
|Explain the product, price, promotion and place elements of the marketing mix. Relate your explanations to National Bank Ltd.|
Sample Answer (i)
|(a) Product is made up of the detailed characteristics of the good/service on offer, its distinctive features, its design, packaging and colour. It includes any unique selling point (USP) such as its quality, after-sales service, guarantees, brand name and image.
The service (product) that National Bank Ltd offers is ‘In January 2016 it launched its new home insurance facility ‘PROTECTION’, providing different policies, buildings and contents insurance options”.
(b) Price is what one pays for a product. It is also the representation of the value of the product to the buyer. The price of a product on the market will be determined by the cost of manufacture, the competition and target market. If the particular product is aimed at the luxury end of the market then the price set may be high and vice versa.The pricing strategy that National Bank Ltd. has opted for is a low pricing strategy called penetration pricing in order to capture market share as quickly as possible. “It charges a reduced premium 30% off standard house insurance rates.”
(c) Promotion is concerned with letting existing and possible future customers know about the products on offer in order to increase sales. The essential promotional methods (techniques) are advertising, sales promotion, public relations and personal selling.National Bank Ltd. opted for public relation and advertising “The facility “PROTECTION” had a high profile celebrity launch accompanied by an extensive advertising campaign.”
(d) Place is about distributing the right product/service to the customer at the right place and at the right time. The most suitable channel of distribution must be used. Selling Direct /selling online are convenient for the sale of insurance and cuts out the costs associated with intermediaries. It brings the organisation closer to the customer. Companies can advertise and sell their products on line using a company web site. Consumers place orders on line and the service is provided or in the case of physical goods the products are delivered using the postal system or a courier delivery service.
National Bank Ltd. uses direct selling to get its product to the market place, ‘Quotations (prices) can be obtained directly online’.
|Q1||1. Complete the three missing elements of the Marketing Mix:
|Q2||“Apple” is one of the world’s leading brands. Outline two benefits of having a brand name.
|Q3||Complete the following table, which refers to examples of Promotion Techniques, by placing a tick in the correct box for each example.
|Q4||Supermac’s fast food is an example of an Irish franchise.
Explain the term ‘franchise’ and state one advantage of a franchise as a form of business ownership.
|Q5||Study the break-even chart below and answer the following questions in the Answer Box provided:
(i) Break-even point (BEP) in units and in euros
(ii) The Profit at Forecast Sales (10,000 units) in euros.
(iii) Margin of safety (MOS) in units.
|Q6||Column 1 is a list of five marketing terms. Column 2 is a list of six possible explanations of these marketing terms.
(One explanation does not refer to any of the business organisations listed)
Match the two lists by placing the letter of the correct explanation under the relevant number below:
|Q7||Brian McCarthy owns a restaurant. The average amount spent by each customer is estimated to be €30. He knows that the average variable cost per customer is €10 and that the weekly fixed costs are €7,000. The restaurant had 500 customers last week.
|Q8||(a) Explain the meaning of the term ‘Own-brand products’.
(b) Outline two reasons why retailers use ‘Own-brand products’.